Renault : cape town to organic growth, decidedly cost-effective

Carlos Ghosn wants to bring Renault into a new phase of its history. After the plan Drive the Change has enabled the brand to the diamond-re in a process of ” budgetary discipline “, plan, Drive the Future, disclosed this Friday, aims to focus the group on a “sustainable growth, profitable and global,” according to the own words of the Ceo of the French group.

The strategic plan aims for a turnover of more than € 70 billion in 2022, with an operating margin of over 7%, an increase of more than 50% of this ratio of profitability. The cash flow must be positive each year of the term of the plan. In 2022, Renault together with its subsidiaries (Dacia, Avtovaz, Alpine and Renault Samsung Motors) will need to be marketed 5 million cars in 2022, an increase of 40% compared to 2016 !

This is not in Europe that the group wants to take the main lever in volume of sales. The first lever will of course be Asia, particularly China. The Renault group has belatedly implemented in this country (2016 first year of operation with approximately 35,000 cars sold). Carlos Ghosn believes it possible to reach a volume of 550.000 registrations on the first market in the world in 2022, which would increase the sales with 700,000 sales in Asia-Pacific. In China, the group wants to market seven models, including three electric cars.

500.000 cars in addition in India and Iran

In India, the group is also very aggressive in building on the success of the Kwid. Two other models of the same family will be launched. Renault aims to the 250,000 cars in 2022 (more than 5% market share) compared to 132,000 in 2016. Iran will also have to wear the group’s growth with 250,000 deliveries, against 109.000 in 2016. In this country, Renault wants to capture 15% of the market. The industrial capacity will be increased to 150,000 cars per year.

In Latin America, Renault wants to increase its volumes by 40% and exceed 600,000 cars at the end of the plan. The goal is to reach 10% market share in Brazil and keep the position of number one in Argentina.

The eldorado Russian

Finally, it is in Russia that Renault wants to boost its sales. Carlos Ghosn believes that the growth potential is enormous in this country, and Renault has all the levers to make the maximum profit. The group notes that if Russia accounted for a mere 1.4 million units in 2016 in total, he has already proven in the past that he could flirt with the threshold of 3 million registrations in 2012 or in 2008. With Avtovaz, which is now under control, and even in the consolidated accounts of the group, Carlos Ghosn wants to take back positions. The arrival of the two models (Vesta and Xray) has already allowed Lada to regain 4 points of market share to 19.5% in 2017. The objective of Avtovaz will continue its efforts to achieve the same ratios of competitiveness of the Renault group. The renault brand, it will need to continue his offensive trade in Russia and achieve a market share of 10% at the end of the plan (to 8.2% in 2016), or about 250,000 cars.

The French group also wants to boost the strategy for light-duty trucks to support its growth. With its range of vans and other Kangoo, the group feels it is well positioned and competitive. The objective is to increase volumes by 40% and multiplying by two the geographical coverage of this branch, in particular with the arrival of pick-up. The chinese market is the most referred to with its 3 million of VUL. Renault will increase the number of products in this segment, but also the electrify. Finally, the brand will continue its efforts in the field of services B-to-B to attract businesses.

Of new products connected, electric, and autonomous

The last lever to bring the volumes will of course be the product strategy. It will be based on the launch and the renewal of 21 models by 2022, of which 8 SUV. The goal is to expand the product lines to go seek out new business opportunities. These new products will be more connected but also more self-reliant. This is the new Clio which will inaugurate the new stuff. Two cars of B-segment will have a range of level 2 before 2019. And in 2022, Renault intends to market the cars with an autonomy of level 4, to aim at the fleets of robotaxis. The range global access will not be neglected, because Ghosn wants that it represents two million cars per year at the end of the plan. The renewal of the Duster and the enlargement of the family Kwid should help.

Finally, the electric car should be a powerful lever of competitiveness for the group, which is estimated to be ahead of its competitors. “We are going to accelerate while our competitors are still at the start,” said Gilles Normand, in charge of the department’s electric car. “Our DNA remains the electric mobility affordable “, he added. As well, Renault will be launching close to 8 new electric cars, including 3 renewals.

A concern with strong profitability

The organic growth will therefore be the watchword of the strategy of Renault. But the question for Carlos Ghosn to leave the machine in industrial packing and whiling away the costs. Thierry Bolloré, in charge of the competitiveness, said the new leverage synergies that will enable Renault to remain competitive : the engineering that is shared with Nissan and Mitsubishi, the sharing of platforms and parts that will be pushed even further. 80% of the cars will be manufactured from common platforms, and 100% of the non-visible components. Renault will be the cost of parts decrease by 20%. The aim of multiply by two the synergies between 2016 and 2022.

All the departments of the group are mobilized to contribute to this effort. From marketing to R&D through the captive insurance company (RCI Banque)… Carlos Ghosn summarized in a few words the spirit of this plan : “double the volume and triple the profits” !

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